The relationship between public schools and housing values is an integral aspect of the real estate market in many areas. Families with children often prioritize living in neighborhoods that offer access to top-quality public schools, leading to increased demand and higher housing prices in such areas. This dynamic results in a strong correlation between public school quality and home values, where even modest homes in top-rated school districts can be priced significantly higher than comparable properties in areas with lower-performing schools. Conversely, neighborhoods served by underperforming public schools may experience stagnation or even declines in housing values as families with school-aged children seek homes in areas that provide better educational opportunities.
The aspects used to measure public school quality play a crucial role in understanding how schools affect housing values. A primary indicator is standardized test scores, which are often used to rank schools at the state or national level. Schools with higher test scores are generally seen as academically stronger, attracting homebuyers who value education for their children. Graduation rates also provide insights into school quality, as schools with high graduation rates are perceived as better at preparing students for postsecondary education and the workforce. Teacher-to-student ratios are another important factor, with smaller class sizes being linked to more individualized instruction and better learning outcomes. Schools that offer robust extracurricular programs, such as sports, arts, and clubs, are also highly valued because they provide students with a well-rounded education that goes beyond academics.
For households that send their children to private schools, the relationship between public school quality and housing values may be less significant. These families are not reliant on the local public school system and may prioritize other factors when choosing where to live, such as proximity to their preferred private school, convenience to work, or the overall desirability of the neighborhood. However, living in areas with high-performing public schools can still be beneficial for these households. Neighborhoods served by excellent public schools tend to have higher property values, better public services, and a greater sense of community stability, which can make them attractive places to live even for families who do not directly utilize the public school system. Additionally, areas near private schools may still command premium prices if the private school itself is prestigious or highly regarded.
The relationship between public school quality and housing values is not uniform across all metropolitan statistical areas (MSAs). In high-demand MSAs such as San Francisco, Boston, or New York, the correlation between school quality and home prices is particularly strong. These areas have competitive housing markets, and families are willing to pay a substantial premium to ensure access to top-rated schools. In contrast, in smaller or less competitive housing markets, such as parts of the Midwest or rural South, the relationship between school quality and housing values may be less pronounced. In these regions, other factors such as proximity to employment opportunities or the overall economic health of the area may play a larger role in determining home values, reducing the impact of school quality on real estate prices.
One area where school quality impacts housing values differently is based on the type of school—elementary, middle, or high school. Families with younger children may place more importance on access to high-quality elementary schools, as these institutions often lay the foundation for future academic success. Elementary schools tend to be more closely tied to community involvement, which can further drive up housing prices in areas served by well-regarded elementary schools. Middle schools, while important, generally have a less pronounced impact on housing values than elementary or high schools, as the period of middle school education is shorter and often seen as a transitional phase. High schools, however, can have a significant impact on home values because they are closely associated with college readiness, graduation rates, and the overall prestige of a neighborhood. In many cases, homes in districts served by high-performing high schools tend to be in particularly high demand, especially for families with older children preparing for college.
Access to reliable information about school performance is crucial for families and real estate professionals. Several key sources provide detailed data on school quality:
GreatSchools.org: This popular website rates schools across the U.S. based on test scores, college readiness, student progress, and more. Parents often use this resource to compare schools in different areas.
State Education Departments: Most state governments publish annual reports on school performance, including standardized test scores, graduation rates, and other performance indicators.
School District Websites: Local school districts typically provide data on individual school performance, teacher qualifications, and facilities.
The Educational Opportunity Project at Stanford University:
In summary, the relationship between public school quality and housing values is particularly strong in highly competitive MSAs, where families are willing to pay premiums for access to top-rated schools. Measuring school quality involves several important factors, including test scores, graduation rates, class sizes, and extracurricular programs. Even for families who send their children to private schools, living in areas with high-quality public schools can be advantageous, as these neighborhoods tend to have higher property values and better amenities. The impact of school quality on housing prices also varies depending on the type of school, with high schools often having the strongest influence due to their connection to college preparation. Finally, reliable sources such as GreatSchools.org and state education departments offer valuable insights into school performance, helping families make informed decisions about where to live.
Our Market Stadium research team plans to launch school score features with more detailed information on school boundaries, quality, and scores by end of this year.
Q & A?
Jay Ha
Head of Urban Research
Doctoral student in Urban Planning at USC
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